Kinder Morgan Energy Partners LP (KMP:US), the second-largest U.S. natural gas pipeline operator, agreed to buy American Petroleum Tankers and State Class Tankers from private-equity firms Blackstone Group LP (BX:US) and Cerberus Capital Management LP for $962 million in cash.
The acquired companies transport crude oil, condensate and refined products using Jones Act-qualified tankers, each with 330,000 barrels of cargo capacity, Houston-based Kinder Morgan said in a statement today. American Petroleum’s fleet consists of five tankers, each an average of four years old, while State Class is building four tankers to be delivered in 2015 and 2016.
“This is a strategic and complementary extension of our existing crude oil and refined products transportation business,” John Schlosser, president of Kinder Morgan’s terminals segment, said in the statement.
The nation’s highest oil and gas production in more than three decades is enticing investors to ships hauling processed fuels because the U.S. bans most crude exports. Demand for the carriers is accelerating at a time when most of the maritime industry is slumping. The Jones Act requires movements between U.S. ports to be made on U.S.-built-and-crewed tankers, which are fewer in number and more expensive than foreign ships.
American Petroleum’s tankers, which are under contract through at least September to customers including BP Plc, Royal Dutch Shell Plc and Phillips 66, work for an average of $54,000 a day, according to a federal filing last month. The company generates about $55 million in annual earnings before interest, taxes, depreciation and amortization, Kinder Morgan said.
The Sunshine State tanker, built in 2009, has American Petroleum’s longest contract, running through December 2016 for Chevron Corp. with an option for another year after that.
American Petroleum today withdrew a proposed initial public offering of its units with the Securities and Exchange Commission following the announcement by Kinder Morgan.
Kinder Morgan said it will spend $214 million to finish building the State Class tankers, which will work for an initial term of five years with another three years of optional extensions.
Enterprise Products Partners LP is the largest U.S. natural gas pipeline operator by market value. Kinder Morgan rose 0.4 percent to $79.57 at the close in New York. The units, which have seven buy and 13 hold ratings from analysts, have fallen 0.3 percent this year.
The transaction is expected to close in the first quarter and be accretive at that time, Kinder Morgan said.
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